The Employee Ownership Update

Loren Rodgers

December 15, 2015

NCEO Releases Updated Count of ESOP and ESOP-Like Plans

The number of ESOPs as of the end of 2013 was 6,795, with 10.6 million active plan participants and $1.23 trillion in plan assets. The estimated number of plans is 1.6% lower than the NCEO's official count for the end of 2012, but there is a slight uptick in the number of active participants, and the value of plan assets has been trending up.Public companies, including lightly traded companies, represent 8% of ESOPs and around 79% of plan participants.

ESOP-like plans include profit sharing plans invested primarily in company stock and stock bonus plans that include substantial holdings of company stock. Both need to have at least five active participants to be counted. The number of these plans is 2,528 as of year-end 2013, covering 1.2 million total participants and $64 billion in plan assets.

DOL Continues ESOP Enforcement Project

During a webinar sponsored by the American Bar Association Joint Committee on Employee Benefits, Mabel Capolongo, the Department of Labor's director of enforcement, said that the department was continuing its national enforcement project on ESOPs. The project began in 2005, and Capolongo noted that it currently involves more than 300 open civil cases.

OECD Responds to Comments on Company Stock in Pension Funds

On November 26, the Organization for Economic Cooperation and Development issued a preliminary assessment of the comments it received on its draft for comment of Core Principles of Private Pension Regulation. The original caused concern for employee ownership advocates by proposing the company stock be limited to 5% of a pension fund's holdings.

In response to comments from the ESOP Association, ESCA, Principal Financial Group, and the Beyster Institute, the next draft will include the following language: "These limitations should not apply in the case of pension funds specifically designed to invest in employer stock. To ensure sufficient diversification, either such funds should not be the sole type of pension plan made available to employees by the sponsor or such funds should reduce their investment in the plan sponsor's stock to a prudent level as retirement approaches."

Federal Reserve Defers Rulemaking on ESOPs

On December 4, the Federal Reserve issued a final ruling for common equity requirements for bank holding companies not organized as stock corporations. As part of that ruling, the Fed exempted ESOPs in companies that are bank or savings and loan holding companies "until the Board adopts regulations that directly relate to the application of capital regulations to employee stock ownership plans."

NCEO Board Nominations Close on Friday

The deadline for potential candidates to be nominated for the NCEO's board of directors is this Friday, December 18. Annual elections for the board will take place in January, and members in good standing are invited to nominate themselves or other members. Potential nominees should review the online resources for board candidates. The NCEO's board is actively engaged in many of the organization's activities, from contributing to the content of our research and publications to assisting at the annual conference and finding new members.